Electric vehicle subsidies in India have shifted significantly in 2026: the central cash incentive for electric two-wheelers under PM E-DRIVE ended on July 31, 2026, while electric three-wheeler subsidies remain available through March 2028. EVs also continue to benefit from a reduced 5% GST rate compared to 18-40% on petrol and diesel vehicles.
What Happened to FAME and PM E-DRIVE?
The FAME II scheme, which offered direct purchase subsidies on electric vehicles, was succeeded by PM E-DRIVE, launched in October 2024 with a Rs 10,900 crore budget over two years. Under PM E-DRIVE, electric two-wheelers received an incentive of Rs 2,500 per kWh of battery capacity, capped at Rs 5,000 per vehicle, until that window closed on July 31, 2026. Consequently, electric scooters purchased from August 1, 2026 onward no longer receive this central cash subsidy, though state-level incentives may still apply depending on where you live.
Which Vehicle Categories Still Get Subsidies?
Electric three-wheelers, including e-rickshaws and e-carts, retain their subsidy support through an extended window running to March 31, 2028, reflecting the government’s continued focus on this segment for last-mile transport and livelihood support. Additionally, a newly notified framework specifically targets mass-market passenger electric cars priced under Rs 15 lakh ex-factory with at least 50% local Indian parts content, aiming to make EVs more accessible to middle-class buyers. Furthermore, funding also remains active for electric buses, trucks, ambulances, and public charging infrastructure under the broader PM E-DRIVE umbrella.
The GST Advantage That Remains
Beyond direct purchase subsidies, electric vehicles continue to benefit from a significantly lower GST rate of just 5%, compared to 18% or 40% for petrol and diesel vehicles under the GST 2.0 structure effective since September 2025. Therefore, even as direct cash subsidies for certain EV categories phase out, this tax advantage continues to meaningfully lower the effective purchase price of an electric vehicle relative to a comparable fossil-fuel vehicle.
State-Level EV Subsidies
Several state governments offer their own additional incentives on top of any central scheme, often including road tax exemptions, registration fee waivers, and in some cases direct purchase subsidies for two-wheelers, three-wheelers, or cars. Since state policies vary considerably and change periodically, it is worth checking your specific state transport department’s current EV policy before finalizing a purchase, as this can meaningfully affect your final on-road price.
Should You Still Buy an EV in 2026?
Even with the central two-wheeler subsidy ending, the combination of state-level incentives, the 5% GST rate, and continued savings on fuel and maintenance costs still makes EVs financially attractive for many buyers. Before deciding, compare your options using our guide to best electric vehicles in India for 2026, and use the EV vs Petrol Cost Comparison Calculator to estimate your long-term savings. For a foundational overview, see our explainer on what an electric vehicle is. Browse more explainers in the Green Tech & Innovation category.
How to Check Your Specific Subsidy Eligibility
Since EV subsidy rules now vary significantly by vehicle category and continue to evolve, the most reliable way to confirm current eligibility is checking directly on the official PM E-DRIVE portal or your state transport department’s website before finalizing a purchase. Dealers are generally aware of current subsidy status for the specific vehicle category you’re buying, but it’s worth independently verifying this rather than relying solely on showroom claims, since subsidy rules have changed multiple times over the past two years. Additionally, keep in mind that subsidy eligibility often depends on specific criteria like battery capacity, ex-factory price caps, and local component sourcing percentages, so two seemingly similar vehicles may qualify differently based on these technical details.
What This Means for EV Buyers Going Forward
The phase-out of the electric two-wheeler subsidy signals a broader shift in India’s EV policy approach, moving from broad-based purchase subsidies toward more targeted support for specific vehicle categories and infrastructure development. Consequently, prospective two-wheeler buyers should factor in the higher effective price when budgeting, while three-wheeler and passenger car buyers can still expect meaningful subsidy support for the near term. Furthermore, as battery and manufacturing costs continue to decline domestically, many industry analysts expect EVs to increasingly compete on cost with petrol vehicles even without direct subsidies, reducing the long-term importance of subsidy programs as a primary purchase driver.
Frequently Asked Questions
Is there still a subsidy for electric scooters in India?
No central cash subsidy is available for electric two-wheelers purchased from August 1, 2026 onward, since the PM E-DRIVE incentive window for that category closed on July 31, 2026.
Do electric three-wheelers still get a subsidy?
Yes, electric three-wheelers including e-rickshaws and e-carts retain subsidy support under PM E-DRIVE through an extended window running to March 31, 2028.
What GST rate applies to electric vehicles?
Electric vehicles are taxed at just 5% GST, compared to 18% or 40% for petrol and diesel vehicles under the GST 2.0 structure effective since September 2025.
Are there state-level EV subsidies available?
Yes, many states offer additional incentives such as road tax exemptions and registration fee waivers, though specific benefits vary and change periodically by state.
What is PM E-DRIVE?
PM E-DRIVE is the central government scheme that succeeded FAME II in October 2024, offering incentives across EV categories including two-wheelers, three-wheelers, buses, and charging infrastructure.